Praying For Capitalism

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By Anthony Stark

 

During the past 3 years, I have been privileged to work alongside many patriotic and sincere Catholics, both lay and clergy, in the Religious Freedom Movement that rapidly took shape in the wake of Obamacare’s attacks on Catholic Social Institutions. So outrageously egregious were these attacks that in March of 2012, Cardinal Timothy Dolan called on Roman Catholic worshippers to become more involved in politics and stand with the church against the Obama Administration in what he termed a “freedom of religion battle.”

Recall that President Barack Obama had moved to mandate that religious-affiliated institutions such as hospitals and universities include free birth control coverage in their employee health plans even though this violated their most basic religious beliefs.

Cardinal Dolan rightly responded publically, saying “We’re not trying to impose our teachings on anybody…. We’re simply saying, don’t impose your teaching upon us and make us do as a church what we find unconscionable to do.”

In response to this call many rallies, protests and educational events regarding the protection of our religious freedom under the US Constitution were held, all of them organized by average people working at the grassroots level in conjunction with many brave priests, who participated throughout their local parishs. Although I am myself Protestant, I was proud to stand with them on this important issue.

Again, speaking as a non-Catholic, I am a great admirer of Pope John Paul II, who fought European totalitarianism his whole life and who provided so much of the spiritual strength that helped end of the Cold War; I also greatly admire the retired Pope Benedict XVI, who spoke so eloquently in his address at Regensberg on the relationship between Faith and Reason and how differing concepts regarding both affected the issue of Christian / Muslin relations.

It is therefore with great sadness that I listen to Pope Frances’ opinions on issues such as Capitalism, Immigration and Climate Change. While I’m sure they represent a sincere desire on his part to alleviate what he sees as economic injustice, intolerance and ecological challenge, the facts indicate that his positions on these issues may very well produce an exacerbation of such problems rather than their solutions.

Questions Regarding Capitalism

Despite the seeming army of spin doctors who are apparently required to explain “what the Pope REALLY meant” it is quite clear that the Pope’s view of Capitalism… as well as its historic relationship to the elimination of poverty and the creation of wealth… is, to say the least, very flawed and inaccurate.

Coming from a country, Argentina, which has been mired in neo-Fascist economics for a century, it is not surprising to find the Pope conflating Free Market Capitalism with Government directed Crony Corporatism.

The former relies on the type of competition, free markets and limited government the provides for what economist Joseph Schumpeter called Capitalism’s “Creative Destructive Process,” which he described as a “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.”

The latter relies on government choosing which businesses… usually those who are their financial benefactors and political allies… win and prosper and which… usually their political enemies… will lose and go bankrupt. Neo-Fascism squelches competition, heavily regulates markets in favor of its political programs and allows private ownership but only if such owners “cooperate” with government demands and conduct their business according the government’s “plan.”

Force, economic coercion and violence are the common currency of such governments; political oppression, economic stagnation and economic inequality are the results.

The Argentina Pope Frances lived under was plagued by this Crony Corporatist neo-Fascism under such leaders as Juan Peron, who was himself an open and fervid admirer of Benito Mussolini, the Italian dictator who originated the Fascist Movement in the early 1920s, which swept the world into war and mass misery in the 1940s.

The Pope was right to oppose such a tyrannical movement; but he is wrong to conflate it with Capitalism.

For thousands of years throughout man’s history a hard, brutal and subsistence oriented lifestyle was the status quo for the overwhelming majority of the human population. Man was caught in what came to be known as the Malthusian Trap, named so after the renowned nineteenth century British scholar, Thomas Malthus, who popularized the theory. His theory held that the world contained a finite pool of scarce resources for which man would perpetually be in violent competition for.

In looking at the history of man from its beginnings roughly two-hundred thousand years ago until the time Malthus was alive, he was in fact very correct. The resources available to man were indeed limited, scarce and privy only to those strong enough to secure them. Wealth was acquired through brute force and then stockpiled. It was viewed as something that is finite and taken, rather than something that is potentially infinite and created.

Over this span of man’s history most lived in abject poverty.

Economist Gregory Clark points out in his book, “A Farewell to Alms,” how the world income per person, for thousands of years, hovered mostly below and sometimes marginally above the poverty line. Innovation and technology, especially with respect to medicine, remained rather primitive overall and saw extremely limited progress over time. Life was, for the most part, a harsh struggle to secure the few crumbs available that were required in order to survive. It is no wonder that world life expectancy remained in the mid-twenties for thousands of years.

However, beginning in the late eighteenth and early nineteenth centuries, a great shift with respect to the history of man occurred. In the span of under two-hundred years, a small blip in the grand scheme of thousands of years of human history, the status quo of harsh, subsistence living began to completely change for the better, for more and more people.

The advancement of technology and innovation, world GDP per capita, world income per capita and world life expectancy began to skyrocket at virtually the same point in time – the industrial revolution or, more specifically, the point in time wherein the economic theory/system known as modern Capitalism began to spread and make its way around the globe (hence, the “globalization” of modern industrial Capitalism).

Author and Philosopher Ayn Rand once stated (as backed by data regarding income, GDP, life expectancy, etc.) that the spread of Capitalism “has released men from bondage to their physical needs, has released them from the terrible drudgery of an eighteen-hour workday of manual labor for their barest subsistence, has released them from famines, from pestilences, from the stagnant hopelessness and terror in which most of mankind had lived in all the pre-Capitalist centuries…”

Why is this so?

The answer is obvious when one looks at the definition and nature of Capitalism.

According to the dictionary, Capitalism is defined as “An economic system based on a free market, open competition, profit motive and private ownership of the means of production. Capitalism encourages private investment and business.”

In broad terms, Capitalism is superior to non-Capitalism or pre-Capitalism and is, by its actions, more in tune with the human desire for acquisition of material wealth. This is because it is able to channel violent competition for scarce resources, the aforementioned Malthusian Trap, into the non-violent creation of wealth through the pursuit of one’s own rational self-interest.

Further, it provides a mechanism – the free market – for sublimating what would otherwise be an often violent war for the few crumbs available in an endless state of primitive scarcity into an ever increasing pool of wealth that all people have a chance of accessing and, even more importantly, of expanding through their own creation of wealth.

The whole idea and perception of wealth was transformed.

Up until the Industrial Revolution and the globalization of the Capitalist system it promulgated, the limited, stagnant, non-growing pool of wealth was often acquire wealth by force. Primarily, this was accomplished either through the spoils of war, (e.g. the Roman Empire), or through raiding, pillaging, piracy, etc. (e.g. the Norse Vikings). In fact, the etymology of the word “Viking” has roots in the Old English word “wicing,” which referred to one who was a pirate or a thief who went to “go Viking” on a mission of plunder rather than embarking on a mission of commerce. The spread of Capitalism promoted the notion of wealth creation as opposed to the notion of wealth relocation or redistribution.

Increased productivity and efficiency coupled with the idea of creating wealth led to more innovation and technological advancement. In fact, according to Jacob Bronowski, author of “The Ascent of Man,” as modern industrial Capitalism spread human technology and innovation skyrocketed. This is because Capitalism promotes competition and rewards those who produce the most efficient way to deliver the best product or service to the market. There is an incentive for innovation and the advancement of technology as the pursuit of both usually lead to the creation and acquisition of more wealth.

Medical practices are one of many beneficiaries to this system and process. In particular, according to British economist Angus Maddison, world life expectancy remained in the mid-twenties for thousands upon thousands of years. However, not coincidentally, world life expectancy began to exponentially increase at the same time as the other previously mentioned world trends and the cause can be attributed to the reasons detailed above. Life expectancy rose, exponentially, from the mid-twenties to near seventy in less than two hundred years and the start of the exponential increase coincides directly with the beginning of the globalization of modern industrial capitalism.

Freedom followed prosperity.

Although slavery had existed for ~11000 years, starting in the early 1800’s, something started happening – in under 250 years, a small blip in the grand scheme of things – the entire world abolished slavery.

By 1980, almost the entire world except for the most barbarous of backwaters had abolished slavery.

Why is this so? Why did this progression start with industrialization and the globalization of Capitalism?

Did humanity suddenly become more moral or ethical? While this may have been a partial factor, as were other political/social factors, the main reason – the enabling factor – was Capitalism.

Capitalism made the abolition of slavery a viable option, both socially and economically.

Socially and/or morally, as Department of Economics Chairman at George Mason University Donald J. Boudreaux states, “a belief in the universal dignity of human beings, their equality before the law, and their right to govern their own lives cannot long coexist with an institution that condemns some people to bondage merely because of their identity.”

The United States of America is a prime example of this.

Economically speaking, slavery is incongruent with Capitalism’s tenets of maximizing efficiency, productivity and, subsequently, wealth creation. Slaves are productive only when doing simple and easy tasks and, further, tasks that can be easily monitored. It is very simple for a slave-master to control his slave when performing menial tasks and the scope with which an individual slave can damage the entire operation is severely limited. Compare, for example, the work done in a modern factory to some sort of menial labor, say agricultural. While not entirely impossible to monitor and shadow each potential slave each moment of his time spent laboring in a factory, the act of doing so would become prohibitively costly. It would be (and was) much more efficient and productive to employ workers who actually want to work – and are paid to do so – than to have a slave operate expensive, easily damaged machinery, whether by mistake or on purpose. Not coincidentally, where Capitalism has spread over the past two hundred years an eventual abolition of slavery has invariably followed.

Take next the issue of poor working conditions, or what today has become known as “sweatshops,” a phenomenon that has come under much dispute in recent times when debating the positive and negative effects of globalization with respect to developing nations. Many critics of the spread of Capitalism are quick to point out the terrible working conditions in the factories/sweatshops that follow in the footsteps of the process.

Common words used to describe them are exploitative, unjust and evil. However, upon closer inspection, one might realize the benefits these sweatshops offer and, more importantly, that historically the more a developing nation develops (meaning the more it frees and opens its markets and embraces Capitalism), the better the developing nation’s working conditions generally become.

Next, take the issues of agricultural production and global hunger. Since the 1800’s, the percent of the global population employed in the agricultural sector has been declining. Further, the global population has been increasing at an exponential rate. On the surface, it would appear that these two trends would cause agricultural production to decline and global hunger to skyrocket. Upon examining both, however, one finds that this is not the case.

According to the FAO (Food and Agriculture Organization), global agricultural production has increased steadily and, further, agricultural production in developing nations has followed suit. This would seem incongruent with the fact that when developing nations open themselves to the world market they typically transition from an agrarian economy to an industrialized one. The answer lies with the spike in human innovation and technology that accompanies Capitalism and free markets. In much the same way the previously mentioned invention of the jackhammer augments the efficiency and production of construction workers, inventions such as the tractor augment the efficiency and production of farmers. Less labor and man-power is then needed to produce.

According to the FAO, UNICEF (United Nations International Children’s Emergency Fund) and the United Nations GHI (Global Hunger Index), the areas of the world with near negligible incidences of hunger are North America, Western Europe and Australia.

Not surprisingly, these areas share the common characteristics of free, open, capitalist and globally oriented economies and markets.

Also not surprisingly, the area of the world with the most incidences of hunger (alarming and extremely alarming on the GHI scale) is in Africa, particularly Central and Sub-Saharan Africa. This area, as mentioned before, is perhaps the most hostile to open, free and Capitalist markets. On a global scale, a sizable portion of the world sees low to moderate (or negligible) incidences of hunger.

Professor of Population Studies at Stanford University, Paul R. Ehrlich, predicted in 1967 that during the 1970’s, 1980’s and onward, there would be mass starvations due to population booms. While Ehrlich was right in the sense that mass starvations occurred, this is deceptive in and of itself. The human population nearly doubled over the time periods of Ehrlich’s predictions – thus, as percent of global population, the amount of people starving to death actually declined. In this context, it makes little logical sense that overpopulation was the culprit. Rather, the more logical culprit appears to be a lack of free, open markets and a lack of Capitalism – in essence (combined), a lack of access to the trend toward Capitalist globalization.

The Pope claims to be concerned that Capitalism produces “income inequality” and callously allows the rich to remain aloof to the suffering of the poor; he repeats the “rich get richer while the poor get poorer” mantra and advocates that the rich be more compassionate and happily “share” their great wealth with the less fortunate.

The idea that Capitalism cruelly and selfishly perpetuates poverty is perhaps his greatest misperception.

The exponential spike of global income over man’s history has already been displayed as a result of the globalization of Capitalism. However, more recent trends over the last fifty years lend even more credence to this assertion.

In a remarkable study by economists Maxim Pinkovskiy and Xavier Sala-i-Martin (Parametric Estimations of the World Distribution of Income), they have calculated that World Poverty Count (1970-2006) has plummeted from 967,574,000 in 1970 to 350,436,000 in 2006.

This is a decrease of a whopping sixty-four percent.

The biggest contributor has been the opening of markets and adoption of free market/Capitalist tendencies in China and India. In the same study, Pinkovskiy and Sala-i-Martin found that poverty rates have declined greatly in East and South Asia and Latin America but have remained relatively the same in Sub-Saharan Africa.

The reasons as to why this is so follows suit with previous assertions.

Additionally, former United Nations Secretary General Kofi Annan stated, “Many millions of people are excluded, left behind in squalor not because they have been exposed to too much globalization but because they have had too little or none at all,” as to why regions (such as much of Africa) see its people continually remain in abject poverty.

Surjit Bhalla, of the Institute for International Studies, observed that in 1820 less than five percent of the world population was classified as “middle class.” However, since 1820, the percentage of those classified as “middle class” has steadily increased to upwards of sixty percent of the world population, a stunning trend. This tells us that, contrary to popular beliefs of detractors of the globalization of capitalism, as the rich get richer, so too do the poor and the middle class.

One can see a great disparity in the income levels of the poorest ten percent between the most and least economically free nations – an average of $6,877 in the most versus an average of $823 in the least.

Detractors like to point to the fact that capitalism and its global spread lead to inequality.

In a modern open-market Capitalist society, there are those who get “rich” and those, the poor, who become better off as a result.

It is true that where capitalism is introduced, the “gap” between those deemed “the rich” and those deemed “the poor” does widen; but the top and the bottom of the gap both rise to levels much higher than when capitalism was absent, or worse, forbidden.

If “the rich” were becoming richer and “the poor” becoming poorer, then yes, the widening of the “gap” would indeed be a problem. But, for open and free market, capitalist oriented economies, this is not the case and nearly everyone in the system is invariably better off.

Further, the system is extremely upwardly mobile – meaning that those on the bottom of the “gap,” or anywhere in between, can potentially skyrocket to the top virtually overnight. No other economic system thus far in man’s history has provided such an opportunity to so many of its adherents.

Again, the connection between economic and political freedom cannot be stressed enough; the fact that this connection is mis-understood by a figure of world importance as influential as the Pope is very disquieting.

Therefore, it is worth examining certain correlations involved with the economic freedom of certain nations.

According to the index calculated by the Heritage Foundation and The Wall Street Journal, the major factors taken into consideration are business freedom, trade freedom, property rights, investment freedom, government size and labor freedom.

Nations with high degrees of economic freedom invariably see a higher life expectancy for its people. Those living in the most economically free nations see average life expectancies of 75.9 years, whereas those in the least economically free see average life expectancies of 53.7 years – a differential of over twenty years.

The most economically free nations also see exponentially lower infant mortality rates, nine per one thousand births, as opposed to just over eighty-one per one thousand births in the least economically free. The reasons why tie in directly with the more detailed discussion of life expectancy mentioned previously. According to Ben Lieberman of the Heritage Foundation, “free economies innovate better” than the alternative, centrally planned economies.

However, this is about more than “theory.”

The practice of Capitalism proves beyond a shadow of doubt its systemic superiority to pre-Capitalist or anti-Capitalist systems.

Take the cases of the former Soviet Union and its satellite states in Eastern Europe.

The “before” picture was that of nations closed and locked away from the rest of the world behind the “Iron Curtain” dominated by the Soviet Union, which represented the very antithesis to free and open markets, capitalism and freedom in general.

Prior to the fall of the Soviet Union, GDP growth in both nations had been declining to the point of negative growth. Almost immediately after the Iron Curtain was lifted, growth, production and wealth exploded in both countries. The reason why lies within the fact that both nations adopted policies of liberalizing the economy, freeing and opening its markets (even joining the World Trade Organization), and facilitating a friendly environment for the private sector to grow and prosper. The scenarios are similar when looking at any nation formerly caught in the vice that was the Soviet Union who followed similar suit in transitioning from a closed, centrally planned economy to an open, free market economy.

Take next the case of China, perhaps the most exemplary of what happens when a closed market, centrally planned economy transitions to a more open, capitalist oriented one. According to a study by the IMF (International Monetary Fund), GDP per capita in China from 1952 to 1981 during the Great Leap Forward and the Cultural Revolution was flat-lined near zero.

However, circa 1981 China underwent a series of reforms and opened up its markets to the global capitalist system. Not surprisingly, 1981 marks the beginning of a steady explosion in GDP per capita for China. According to the World Bank, the percent of China’s population living under the International poverty line declined from over eighty percent in 1981 to approximately twenty percent in 2005.

Robyn Meredith, in her book “The Elephant and The Dragon,” stated, “China’s economic rise has moved the country forward and greatly benefited the majority of its people, and most Chinese would say they are far better off now than they or their families were a generation ago…Peasants went from earning an average of $16 a year to earning $317 a year in twenty-five years, while the national average rose to $1,023. By 2007, the average income had reached about $2,000.” The “before” and “after” pictures of China are starkly different for the better thanks to the progress made possible by the introduction of increased Capitalism.

Take finally the case of India. For much of the second half of the twentieth century, India’s economy was dominated by socialist-oriented policies. The economy was stifled by widespread regulation, protectionism and a lack of privatization.

Since 1991, however, India has increasingly opened its markets and moved towards a market based, capitalist economy and has subsequently become one of the fastest growing economies on the planet. Between the years of 2000 and 2008, India’s GDP nearly tripled and the percentage of those living under the international poverty line decreased from upwards of sixty percent to under thirty-five percent.

Vijay Kelkar, former Indian Finance Secretary, stated, “We got more done for the poor by pursuing the competition agenda for a few years than we got done by pursuing a poverty agenda for decades.” The results and effects are undeniable – where markets are opened and capitalism spreads, prosperity, whether slowly or rapidly, eventually follows.

The recent election of Narendra Modi, who because of his commitment to increasing the growth of free market Capitalism in his country, is known as “The Indian Reagan,” is further proof of Capitalism’s power to liberate even a country that has been mired in poverty due to colonialist exploitation and Socialist failure for decades.

The record regarding the incredible success of Capitalism is too clear to be ignored and will not be easily dismissed by any counter-ideology or even any mis-placed theology.

The Question of the Environment

The Pope has expressed a grave concern for the environment and has even worried that the world is turning into “an immense pile of filth” and that “People occasionally forgive, but nature never does.”

His view on the Environment express the belief that the spread of capitalism has adversely affected the Earth’s Climate, previously referred to as Anthropogenic Global Warming and currently referred to as Climate Change.

It is worth noting that prior to the debate over man’s actions contributing to Climate Change as a result of the spread of modern industrial capitalism, the general critique of, (or war against, depending on how one wishes to look at it), capitalism was in the form of class warfare, as epitomized by the works of Karl Marx and Friedrich Engels.

Apart from being empirically inaccurate, this theory only produced a litany of failures throughout the Twentieth Century wherever it was applied and culminated in the ultimate failure… and societal collapse… of the Soviet Union.

Thereafter, a new strategy was forged to criticize and combat capitalism: Anthropogenic Global Warming/Climate Change critique.

Having utterly failed, in the face of all evidence, to make the case that Marxism would protect and improve the lives of the common Workers, it now claims that it is needed to protect and improve the Mother Earth… which, contrary to its well-known atheism, it raises to the level of a Pagan Goddess being raped and plundered by the same greedy Capitalists it once equally falsely claimed did the same to the Workers.

This relatively new critique of the capitalist system, which the Pope apparently has accepted, calls for numerous regulations, laws and treaties all designed to limit the very productivity, efficiency, growth and wealth that the system facilitates and promotes.

The main problem is that whether the capitalist system and man’s actions in it are affecting the Earth’s climate or not is still a debate – a debate that has increasingly favored the side that man’s actions do not affect climate or at least that they are greatly overplayed by the other side.

The science on the matter is far from settled and the critique, thus far, fails to be wholly substantial.

In any case, an institution that has a rather poor history when it comes to deciding what is and what isn’t settled science… the Heliocentric Solar System comes to mind… might want to wait for further evidence before declaring what is or isn’t scientific truth.

I have no doubt that the Pope’s concern for the welfare of the poor and for the protection of the environment is sincere and genuine; however, his preference for anti-Capitalist, collectivist solutions to these problems will not satisfy that concern and help to effectuate their resolution.

Further, the elimination of poverty will not be accomplished if one makes a cult out of being poor and portrays its suffering as something edifying and “noble.”

However, the trends, numbers, statistics and cases are undeniable – wealth is the only remedy for poverty, hunger, poor health and poor living conditions – and Capitalism is the only real way so far known to create wealth.

Moreover, the record of improving life on this planet proves that the Scientific Revolution, which flourishes under a Capitalist system that seeks to profit from the advancements it makes, is where we will find the answers to any environmental issues that face us…

…but we will gain nothing by making sacrifices to the type of sterile paganism found in the anthropomorphizing of Nature in form of the Earth goddess Gaea and hoping “she” will “forgive us” for eating from the Tree of Knowledge.

Just as environmental issues are best addressed by the Free Market, so must the issue of Poverty; it is a serious problem that produces nothing but ignorance, misery and oppression and, contrary to the Pope’s critique, the record proves that the only thing that will resolve and perhaps even eliminate it is Capitalism, Capitalism and even more Capitalism.

The pope should not only advocate for this system… he should, as a person who is close to GOD, use his unique position to pray that it spreads as far as possible.

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